Student loan forgiveness doesn’t mean a break from NC taxes
The proverbial phrase about taxes being certain extends to student loan forgiveness, too.
President Joe Biden administration’s new student loan forgiveness plan has been hailed as a game-changer for debt-ridden former college students and also criticized for letting them off. But there’s one payment that won’t be forgiven: taxes to the state.
North Carolina’s Department of Revenue announced Wednesday that while the loan forgiveness plan exempts borrowers from paying federal taxes on those forgiven loans, the same does not apply to state taxes.
The Department of Revenue said in a news release that the General Assembly did not adopt a section of the Internal Revenue Code that would include student loan forgiveness as non-taxable income.
The state legislature could potentially change that, however.
The Department of Revenue is “monitoring any further enactments by the General Assembly that could change the taxability of student loan forgiveness in North Carolina,” DOR spokesperson Donna-maria Harris wrote.
The legislature finished up the expected work of its annual session on July 1, although it scheduled once-a-month non-voting legislative sessions through December. The Republican leadership, which supported previous tax cuts to individuals and corporations, has left the days in place in case things come up like a deal on Medicaid expansion.
All 170 General Assembly seats are up for election in November. A new legislative session starts in January.
For more North Carolina government and politics news, listen to the Under the Dome politics podcast from The News & Observer and the NC Insider. You can find it at https://campsite.bio/underthedome or wherever you get your podcasts.
This story was originally published August 31, 2022 at 5:54 PM.
.jpg)